34206783 Consumer Buying Behaviour MBA

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Automobile industry in India
The automobile industry in India is the ninth largest in the world with an annual
production of over 2.3 million units in 2008 In 2009, India emerged as Asia's
fourth largest exporter of automobiles, behind Japan, South Korea and Thailand.
Following economic liberalization in India in 1991, the Indian automotive industry
has demonstrated sustained growth as a result of increased competitiveness and
relaxed restrictions. Several Indian automobile manufacturers such as Tata
Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and
international operations. India's robust economic growth led to the further
expansion of its domestic automobile market which attracted significant Indiaspecific investment by multinational automobile manufacturers. In February 2009,
monthly sales of passenger cars in India exceeded 100,000 units.
bryonic automotive industry emerged in India in the 1940s. Following the
independence, in 1947, the Government of India and the private sector launched
efforts to create an automotive component manufacturing industry to supply to
the automobile industry. However, the growth was relatively slow in the 1950s
and 1960s due to nationalization and the license raj which hampered the Indian
private sector. After 1970, the automotive industry started to grow, but the growth
was mainly driven by tractors, commercial vehicles and scooters. Cars were still
a major luxury. Japanese manufacturers entered the Indian market ultimately
leading to the establishment of Maruti Udyog. A number of foreign firms initiated
joint ventures with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for
building motorcycles and light commercial-vehicles. It was at this time that the
Indian government chose Suzuki for its joint-venture to manufacture small cars.
Following the economic liberalization in 1991 and the gradual weakening of the
license raj, a number of Indian and multi-national car companies launched
operations. Since then, automotive component and automobile manufacturing
growth has accelerated to meet domestic and export demands.

1

HISTORY OF THE TWO WHEELERS:
The Britannica Encyclopedia a motorcycle as a bike or tricycle propelled
by an internal –combustion engine (or, less often by an electric engine). The
automobile was the reply to the 19 th –century reams of self-propelling the horsedrawn bikeriage. Similarly, the invention of the motorcycle created the self –
propelling bicycle.

The first commercial design was three-wheeler built by

Edward Butler in Great Britain in 1884.

This employed a horizontal single-

cylinder gasoline engine mounted between two steer able front wheels and
connected by a drive chain to the rear wheel. The 1900s saw the conversion of
many bicycles or pedal cycles by adding small, centrally mounted spark ignition
engine engines. There was then felt the need for reliable constructions. This led
to road trial tests and competition between manufacturers. Tourist Trophy (TT)
races were held on the Isle of main in 1907 as reliability or endurance races.
Such were the proving ground for many new ideas from early two-stroke-cycle
designs to supercharged multivalent engines mounted on aerodynamic, bikebon
fiber reinforced bodywork.
 INVENTION OF TWO WHEELERS:
The invention of two wheelers is a much-debated issue. “Who invented the first
motorcycle?” May seem like a simple question, “safety”, bicycle, i.e., bicycle with
front and rear wheels of the same size, with a pedal crank mechanism to drive
the rear wheel. Those bicycles in turn described from high-wheel bicycles. The
high –wheelers descended from an early type of pushbike, without pedals,
propelled by the rider’s feet pushing against the ground. These appeared around
1800, used iron banded wagon wheels, and were called “bone-crushers”, both for
their jarring ride, and their tendency to toss their riders. Gottiieb Daimler (who
credited with the building the first motorcycle in 1885, one wheel in the front and
one in the back, although it had a smaller spring-loaded outrigger wheel on each
side. It was constructed mostly of wood, the wheels were of the iron-banded
wooden-spooked wagon-type and it definitely had a “bone-crusher” chassis!

2

 FURTHER DEVELOPMENTS:
Most of the developments during the early phase concentrated on three and
four-wheeled design since it was complex enough to get the machines running
with out having to worry about them falling over. The next notable two-wheeler
though was the Hildebrand & Wolf Mueller, patented in Munich in 1894. In 1895,
the French firm of DeDion-button built and engine that was to make the mass
production and common use of motorcycle possible. The first motorcycle with
electric start and a fully modem electrical system; the Hence special from the
Indian Motorcycle Company astounded the industry in 1931. Before World War 1,
IMC was the largest motorcycle manufacturer in the world producing over 20000
bikes per year.
 INCREASING POPULARITY:
The popularity of the vehicle grew especially after 1910, in 1916; the Indian
motorcycle company introduced the model H racer, and placed it on sale. During
World War 1, all branches of the armed forces in Europe used motorcycles
principally for dispatching. After the war, it enjoyed a sport vogue until the Great
Depression began in motorcycles lasted into the late 20 th century; weight the
vehicle being used for high-speed touring and sport competitions. The more
sophisticated of a 125cc model. Since then, an increasing number of powerful
bikes have blazed the roads.
 HISTORICAL INDUSTRY DEVELOPMENTS:
Indian is the second largest manufacturer and producer to two wheelers in the
World. It stands next only to Japan and China in terms of the number of V
produced and domestic sales respectively. This destination was achieved due to
variety of reason like restrictive policy followed by the government of India
towards the passenger bike industry, rising demand for personal transport,
inefficiency in the public transportation system etc.

The Indian two-wheelers

industry made a small beginning in the early 50s when Automobile products of
India (API) started manufacturing scooters in the country. Until 1958, API and
Enfield were the sole producers.

3

The two –wheelers market was opened were opened to foreign competition in the
mid-80s. And the then market leaders-Escorts and Enfield – were caught
unaware by the onslaught of the 100cc bikes of the four Indo- Japanese joint
ventures.

With the availability of fuel-efficiency low power bikes, demand

swelled, resulting in Hero Honda –then the only producer of four stroke bikes
(100cc category), gaining a top slot.
The first Japanese motorcycles were introduced in the early eighties.

TVS

Suzuki and Hero Honda brought in the first two-stroke and four-stroke engine
motorcycles respectively. These two players initially started with assembly of
CKD Kits, and later on progressed to indigenous manufacturing.
The industry had a smooth ride in the 50s, 60s and 70s when government
prohibited new entries and strictly controlled capacity expansion. The industry
saw a sudden growth in the 80s. The industry witnessed a steady of 14% leading
to a peak volume of 1.9 mn vehicles in 1990.
In 1990 the entire automobile industry saw a drastic fall in demand. This resulted
in a decline of 15% in 1991 and 8% in 1992, resulting in a production loss of
0.4mn vehicles.

Barring Hero Honda, all the major producers suffered from

recession in FY93 and FY94.

Hero Honda showed a marginal decline in

1992.The reason for recession in the sector were the incessant rise in fuel prices,
high input costs and reduced purchasing power due to significant like increased
production in 1992, due to new entrants coupled with recession in the industry
resulted in companies either reporting losses or a fall in profits.

4

INTRODUCTION
Maruti Suzuki is one of India's leading automobile manufacturers and the market
leader in the car segment, both in terms of volume of vehicles sold and revenue
earned. Until recently, 18.28% of the company was owned by the Indian
government, and 54.2% by Suzuki of Japan. The Indian government held an
initial public offering of 25% of the company in June 2003. As of 10 May 2007,
Govt. of India sold its complete share to Indian financial institutions. With this,
Govt. of India no longer has stake in Maruti Udyog.Maruti Udyog Limited (MUL)
was established in February 1981, though the actual production commenced in
1983 with the Maruti 800, based on the Suzuki Alto kei car which at the time was
the only modern car available in India, its' only competitors- the Hindustan
Ambassador and Premier Padmini were both around 25 years out of date at that
point. Through 2004, Maruti Suzuki has produced over 5 Million vehicles. Maruti
Suzukis are sold in India and various several other countries, depending upon
export orders. Models similar to Maruti Suzukis (but not manufactured by Maruti
Udyog) are sold by Suzuki Motor Corporation and manufactured in Pakistan and
other South Asian countries.The company annually exports more than 50,000
cars and has an extremely large domestic market in India selling over 730,000
cars annually. Maruti 800, till 2004, was the India's largest selling compact car
ever since it was launched in 1983. More than a million units of this car have
been sold worldwide so far. Currently, Maruti Suzuki Alto tops the sales charts
and Maruti Suzuki Swift is the largest selling in A2 segment.Due to the large
number of Maruti 800s sold in the Indian market, the term "Maruti" is commonly
used to refer to this compact car model. Till recently the term "Maruti", in popular
Indian culture, in India Hindu's lord Hanuman is known as "maruti", was
associated to the Maruti 800 model.
Maruti Suzuki has been the leader of the Indian car market for over two
decades.Its manufacturing facilities are located at two facilities Gurgaon and
Manesar south of Delhi. Maruti Suzuki’s Gurgaon facility has an installed capacity
of 350,000 units per annum. The Manesar facilities, launched in February 2007
comprise a vehicle assembly plant with a capacity of 100,000 units per year and
a Diesel Engine plant with an annual capacity of 100,000 engines and
5

transmissions. Manesar and Gurgaon facilities have a combined capability to
produce over 700,000 units annually. More than half the cars sold in India are
Maruti Suzuki cars. The company is a subsidiary of Suzuki Motor Corporation,
Japan, which owns 54.2 per cent of Maruti Suzuki. The rest is owned by the
public and financial institutions. It is listed on the Bombay Stock Exchange and
National Stock Exchange in India.
During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were
exported. In all, over six million Maruti Suzuki cars are on Indian roads since the
first car was rolled out on 14 December 1983.
Pressure started mounting on Indira and Sanjay Gandhi to share the details of
the progress on the Maruti Project. Since country's resources were made
available by mother to her son's pet project. A delegation of Indian technocrats
was assigned to hunt a collaborator for the project. Initial rounds of discussion
were held with the giants of the automobile industry in Japan including Toyota,
Nissan and Honda. Suzuki Motor Corporation was at that time a small player in
the four wheeler automobile sector and had major share in the two wheeler
segment. Suzuki's bid was considered negligible.
In the initial rounds of discussion the giants had their bosses present and in the
later rounds related to the technical discussions executives of these automobile
giants were present. Osamu Suzuki, Chairman and CEO of the company ensured
that he was present in all the rounds of discussion. Osamu in an article writes
that it subtly massaged their (Indian delegation) egos and also convinced them
about the sincerity of Suzuki's bid. In the initial days Suzuki took all steps to
ensure the government about its sincerity on the project. Suzuki in return
received a lot of help from the government in such matters as import clearances
for manufacturing equipment (against the wishes of the Indian machine tool
industry then and its own socialistic ideology), land purchase at government
prices for setting up the factory Gurgaon and reduced or removal of excise tariffs.
This helped Suzuki conscientiously nurse Maruti Suzuki through its infancy to
become one of its flagship ventures.

6

Maruti Suzuki's A-Star vehicle during its unveiling in Pragati Maidan, Delhi. AStar, Suzuki's fifth global car model, was designed and is made only in India.
Besides being Suzuki's largest subsidiary in terms of car sales, Maruti Suzuki is
also Suzuki's leading research and development arm outside Japan
Relationship between the Government of India, under the United Front (India)
coalition and Suzuki Motor Corporation over the joint venture was a point of
heated debate in the Indian media till Suzuki Motor Corporation gained the
controlling stake. This highly profitable joint venture that had a near monopolistic
trade in the Indian automobile market and the nature of the partnership built up till
then was the underlying reason for most issues. The success of the joint venture
led Suzuki to increase its equity from 26% to 40% in 1987, and further to 50% in
1992. In 1982 both the venture partners had entered into an agreement to
nominate their candidate for the post of Managing Director and every Managing
Director will have a tenure of five years .
Initially R.C.Bhargava, was the managing director of the company since the
inception of the joint venture. Till today he is regarded as instrumental for the
success of Maruti Suzuki. Joining in 1982 he held several key positions in the
company before heading the company as Managing Director. Currently he is on
the Board of Directors. After completing his five year tenure, Mr. Bhargava later
assumed the office of Part-Time Chairman. The Government nominated Mr.
S.S.L.N. Bhaskarudu as the Managing Director on 27 August 1997. Mr.
Bhaskarudu had joined Maruti Suzuki in 1983 after spending 21 years in the
Public sector undertaking Bharat Heavy Electricals Limited as General Manager.
Later in 1987 he was promoted as Chief General Manager, 1988 as Director,
Productions and Projects, 1989 Director, Materials and in 1993 as Joint
Managing Director.
Suzuki Motor Corporation didn't attend the Annual General Meeting of the Board
with the reason of it being called on a short notice. Later Suzuki Motor
Corporation went on record to state that Mr. Bhaskarudu was "incompetent" and
wanted someone else. However, the Ministry of Industries, Government of India
refuted the charges. Media stated from the Maruti Suzuki sources that
Bhaskarudu was interested to indigenise most of components for the models
7

including gear boxes especially for Maruti 800. Suzuki also felt that Bhaskarudu
was a proxy for the Government and would not let it increase its stake in the
venture. If Maruti Suzuki would have been able to indigenise gear boxes then
Maruti Suzuki would have been able to manufacture all the models without the
technical assistance from Suzuki. Till today the issue of localization of gear boxes
is highlighted in the press.
The relation strained when Suzuki Motor Corporation moved to Delhi High Court
to bring a stay order against the appointment of Mr. Bhaskarudu. The issue was
resolved in an out-of-court settlement and both the parties agreed that R S S L N
Bhaskarudu would serve up to 31 December 1999, and from 1 January 2000,
Jagdish Khattar, Executive Director of Maruti Udyog Limited would assume
charges as the Managing Director. Many politicians believed, and had stated in
parliament that the Suzuki Motor Corporation is unwilling to localize
manufacturing and reduce imports. This remains true, even today the gear boxes
are still imported from Japan and are assembled at the Gurgaon facility.
For most of its history, Maruti Udyog Limited had relatively few problems with its
labour force. Its emphasis of a Japanese work culture and the modern
manufacturing process, first instituted in Japan in the 1970s, was accepted by the
workforce of the company without any difficulty. But with the change in
management in 1997, when it became predominantly government controlled for a
while, and the conflict between the United Front Government and Suzuki may
have been the cause of unrest among employees. A major row broke out in
September 2000 when employees of Maruti Udyog Ltd (MUL) went on an
indefinite strike, demanding among other things, revision of the incentive scheme
offered and implementation of a pension scheme. Employees struck work for six
hours in October 2000, irked over the suspension of nine employees, going on a
six-hour tools-down strike at its Gurgaon plant, demanding revision of the
incentive-linked pay and threatened to fast to death if the suspended employees
were not reinstated. About this time, the NDA government, following a
disinvestments policy, proposed to sell part of its stake in Maruti Suzuki in a
public offering. The Staff union opposed this sell-off plan on the grounds that the

8

company will lose a major business advantage of being subsidised by the
Government.

9

Four Wheeler Industry
Approximately 25 of Benz's vehicles were built before 1893, when his first fourwheeler was introduced. They were powered with four-stroke engines of his own
design. Emile Roger of France, already producing Benz engines under license,
now added the Benz automobile to his line of products. Because France was
more open to the early automobiles, more were built and sold in France through
Roger than Benz sold in Germany. From 1890 to 1895 Daimler and his assistant,
Maybach, either at the Daimler works or in the Hotel Hermann, where they set up
shop after falling out with their backers, built about 30 vehicles. Benz and Daimler
seem to have been unaware of each other's early work and worked
independently.
In 1890, Emile Levassor and Armand Peugeot of France began producing
vehicles with Daimler engines, and so laid the foundation of the motor industry in
France. George Selden of Rochester, New York, who applied for a patent on an
automobile in 1879, supposedly designed the first American car with a gasoline
internal combustion engine in 1877. In Britain there had been several attempts to
build steam cars with varying degrees of success with Thomas Rickett even
attempting a production run in 1860. Santler from Malvern is recognized by the
Veteran Car Club of Great Britain as having made the first petrol-powered car in
the country in 1894 followed by Frederick William Lanchester in 1895 but these
were both one-offs.[The first production vehicles came from the Daimler Motor
Company, founded by Harry J. Lawson in 1896, and making their first cars in
1897.
In 1892, Rudolf Diesel got a patent for a "New Rational Combustion Engine". In
1897 he built the first Diesel Engine. In 1895, Selden was granted a United
States patent(U.S. Patent 549,160 ) for a two-stroke automobile engine, which
hinderd more than encouraged development of autos in the United States.
Steam, electric, and gasoline powered autos competed for decades, with
gasoline internal combustion engines achieving dominance in the 1910s.

10

Every other day a new model of car is being launched in the country, how many
times you must have wished to change that old car of yours and buy a hot set of
wheels. However as you come back to earth, bitter reality bites you; realization
dawns in that you don't have such a big amount of money to invest in a new car.
Don't worry as several banks and financial institution have donned the role of new
age Santa Claus to make sure that your dream comes true. Today car loans are
not only available for brand new cars but they are also available for used cars.
In this section we will try to provide you with an insight into automobile financing
so read on. State Bank of India which is one of the largest nationalized banks in
the country offers you the following advantages


Longer repayment periods up to 7 years



Low processing



No advance EMI along with the down payment effectively increasing the
amount of loan



Interest is calculated on the reducing balance method meaning every time
you repay an amount the interest is calculated on the remaining amount
and not on the one which is out standing at the beginning of the year.

The company gives a loan which is up to 2.5 times of one's net annual income,
with the minimum income cap of the applicant being 75000 rupees per annum.
The company sanctions loans for all new cars and for second hand cars which
are not more than 5 years old. The bank also provides loans to people who don't
have an account with the bank provided they furnish address proof, identity proof
and other relevant documents. For more details click http://www.sbi.co.in
UTI bank offers loans covering 85% of the cost of the vehicle plus registration
and insurance or 20 times the net monthly salary and you can repay the loan with
in a maximum period of 5 years or 60 monthly equated installments.
Car Insurance gives the necessary cover if one meets with some unforeseen
incident or an accident. Car insurance offers a number of benefits. A no claim
bonus is given to the policy holder if no claims are made. It is transferable as it
can be used even if one is changing the auto insurance company.
11

Used car owners shouldn't feel that they are sidelined. Used car insurances help
the second hand car owners greatly. Those who can't afford the luxury cars and
their high prices are opting for used cars.
The Indian automobile industry is the tenth largest in the world with an annual
production of approximately 2 million units. Indian auto industry, promises to
become the major automotive industry in the upcoming years and the industry
experts are hopeful that it will touch 10 million units mark.
Indian automobile industry is involved in design, development, manufacture,
marketing, and sale of motor vehicles. There are a number of global automotive
giants that are upbeat about the expansion plans and collaboration with domestic
companies to produce automobiles in India.
The major car manufacturers in India are Maruti Udyog, Hyundai Motors India
Ltd., General Motors India Pvt. Ltd., Honda Siel Cars India Ltd., Toyota Kirloskar
Motor Ltd., Hindustan Motors etc.
The two-wheeler manufacturers in India are Honda Motorcycle & Scooter India
(Pvt.) Ltd., TVS, Hero Honda, Yamaha, Bajaj, etc. The heavy motors including
buses, trucks, auto rickshaws and multi-utility vehicles are manufactured by TataTelco, Eicher Motors, Bajaj, Mahindra and Mahindra, etc.
 Quick Facts:


First Indian to own a car in India was Jamshedji Tata.



First woman to drive a car in India was Mrs. Suzanne RD Tata.



The passenger car and motorcycle segment in the Indian auto industry is
growing by 8-9 percent.



Commercial vehicle will grow by 5.2 per cent.



The first automobile in India was rolled in 1897 in Bombay.



India is a potential emerging auto market.



Motorcycles contribute 80% of the two-wheeler industry.



Unlike the USA, the Indian passenger vehicle market is dominated by cars
(79%).
12



India is the largest two-wheeler manufacturer in the world.



India's motorcycle segment will grow by 8-9 percent in the coming years.
11. India is the fifth largest commercial vehicle manufacturer in the world.
12. India has the number one global motorcycle manufacturer. 13. In Asia,
India is the fourth largest car market.

The new chapter in the automobile industry is that of used cars. The massive
demand of used cars indicates that cars are becoming increasingly popular.
Those who can't afford the luxury cars and their high prices are opting for used
cars. In today's time, customers are conscious and diligently investing on car
dealership. Car buyers are investing heavily a lot of time for both to sell a car and
buy car. There's also a number of car websites that have offering detailed
information on new car prices, used cars, car reviews, Chevrolet cars, jaguar cars
and luxury cars.
At present major Indian, European, Korean, Japanese automobile companies are
holding significant market shares. In commercial vehicle, Tata Motors dominates
over 60% of the Indian commercial vehicle market. Tata Motors is the largest
medium and heavy commercial vehicle manufacturer.
Among the two-wheeler segment, including scooters and mopeds- motorcycles
have- major share in the market. Hero Honda contributes 50% motorcycles to the
market in which Honda holds 46% share in scooter and TVS makes 82% of the
mopeds in the country. In the three wheeler industry in India, Piaggio holds 40%
of the market share. Bajaj is the leader by making 68% of the three-wheelers.
Car manufacturers in India dominate the passenger vehicle market by 79%.
Maruti Suzuki is the largest car producer in India and has 52% share in
passenger cars and is a complete monopoly in multi purpose vehicles. In utility
vehicles Mahindra holds 42% share. Hyundai and Tata Motors is the second and
third car producer in India.

13

 Cars by Price Range

Under

Rs.

3



Maruti 800, Alto, Omni




Reva
Ambassador



Fiat Palio



Hyundai Santro, Getz



Chevrolet Opel Corsa



Maruti Zen, Wagon R, Versa, Esteem, Gypsy



Ford Icon & Fiesta




Tata Indica, Indigo XL, Indigo Marina
Chevrolet Swing, Optra Magnum, Tavera



Hyundai Accent, Elantra



Mahindra Scorpio



Maruti Baleno



Toyota Innova



Tata Safari



Mitsubishi Lancer, Mitsubishi Cedia



Honda City ZX



Mahindra Bolero




Hyundai Sonata Embera
Toyota Corolla



Ford Mondeo & Endeavour



Chevrolet Forester



Skoda Octavia & Combi




Honda Civic
Honda CR-V



Maruti Suzuki Grand Vitara



Terracan & Tucson

Lakhs
Rs. 3-5 Lakhs

Rs. 5-10 Lakhs

Rs. 10-15 Lakhs

Rs. 15-30 Lakh

14

Rs. 30-90 Lakhs

Above

Rs.

1



Mitsubishi Pajero



Audi A4



Opel Vectra



Honda Accord



Mercedes C Class




Toyota Camry
Audi A6, A8 & Audi TT



BMW X5, 5 Series & 7 Series



Mercedes E Class, S Class, SLK, SL & CLS-Class



Porsche Boxster, Cayenne, 911 Carrera & Cayman S



Toyota Prado
Bentley Arnage, Bentley Continental GT & Flying



Crore

Spur


Rolls Royce Phantom



Maybach

15

 The following links gives the complete picture of Indian Auto Industry

The first auto vehicle rolled out in India at the end of 19th
century. Today, India is the the 2nd largest tractor and 5th
Automobile History

largest commercial vehicle manufacturer in the world. Hero
Honda with 1.7M motorcycles a year is now the largest
motorcycle manufacturer in the world.
On the cost front, OEMs eyeing India in a big way to source
products and components at significant discounts to home

Industry Investment market. On the revenue side, OEMs are active in the
booming passenger car market in India.
The passenger car and motorcycle segment in Indian auto
market is growing by 8-9 per cent. The two-wheeler segment
Industry Growth

will clock 11.5% rise by 2007. Commercial vehicle to grow by
5.2 per cent.
India is the 11th largest Passenger Cars producing countries
in the world and 4th largest in Heavy Trucks. Maruti Udyog

Vehicle Production Ltd. is the leading 4-wheelers manufacturer. Hero Honda is
the leading 2-wheelers manufacturer.
Passenger vehicle exports have grown over five times and
two-wheeler exports have reached more than double.
Auto Export

Exports of auto components, whose manufacturing costs are
30-40 per cent lower than in the West, have grown at 25% a
year between 2000 to 2005.

Auto Companies

Hero Honda is the largest manufacturer of motorcycles.
Hyundai Motors India is the second largest player in
passenger car market. Tata Motors is the fifth largest
16

medium & heavy commercial vehicle manufacturer in the
world.
Know about the number of vehicles registered as Transport
Vehicle Distribution or Non-Transport in the Indian states and Union Territories.
Get all the contact details of Automobile Association of Upper
India (AAUI), Automotive Research Association of India
Associations

(ARAI), Automobile Association of Southern India (AASI),
Automotive Component Manufacturers Association of India
(ACMA) and more

 Sales and Service Network
Maruti Suzuki is one of the companies in India which has unparalleled sales and
service network. As of 2009 it currently has 681 dealerships across 454 cities. To
ensure the vehicles sold by them are serviced properly, Maruti Suzuki has 779
dealer workshops, 1,945 Maruti Authorized Service Stations and 30 Express
Service Stations on 30 National Highways across 1,314 cities in India.
Service is a major revenue generator of the company. Most of the service
stations are managed on franchise basis, where Maruti Suzuki trains the local
staff. Other automobile companies have not been able to match this benchmark
set by Maruti Suzuki. The Express Service stations help many stranded vehicles
on the highways by sending across their repair man to the vehicle.

17

Maruti Poducts
1. 800 (Launched 1982)
2. Omni (Launched 1984)
3. Gypsy (Launched 1985)
4. WagonR (Launched 2001)
5. Alto (Launched 2000)
6. Swift (Launched 2005)
7. Estilo (Launched 2006)
8. SX4 (Launched 2007)
9. Swift DZire (Launched 2008)
10. A-star (Launched 2008)
11. Ritz (Launched 2009)
12. Eeco (Launched 2010)
 Discontinued Car Models
1000 (1990–1994)
Zen (1993–2006)
Esteem (1994–2008)
Baleno (1999–2007)
Versa (2001–2010)
Grand Vitara XL7 (2003–2007)
 May Launch
Maruti Cervo

18

1. Maruti 800:It is a city car manufactured by Maruti Suzuki in India. It is a rebadged version of
an old model of the Suzuki Alto. Over 2.5 million Maruti 800's have been sold
since its launch in 1984. The same car is sold in Pakistan as the Suzuki Mehran
with a much older 1980s era Suzuki SS80 carburetor based engine. The 800 has
undergone some minor face lifts but overall it still remains the same as it was in
1984. The car has reported slipping sales in recent times, mainly due to the
introduction of the Alto at a comparable price. The car produces approximately
37 bhp (28 kW; 38 PS) of power and runs on 12 inch wheels. Curb weight is
650 kg (1,433 lb) and 4 passengers (including the driver) fit in. Top speed is in the
region of 125 km/h (78 mph) and the car is known to deliver fuel economy better
than 20 km/l (47 mpg)

on clear and plain roads.

Maruti Suzuki had earlier

launched a version with a 4 valves per cylinder engine producing 45 bhp (34 kW;
46 PS) coupled with a 5-speed manual transmission (currently found in the
Suzuki Alto) but discontinued it after a couple of years.
The Maruti 800 is still popularly hailed in India as "the smallest car in
production" due to its relatively tightly spaced interior. Its main competitor is the
cheaper Tata Nano (123,000 compared to 184,641 Rupees) which has an 8
percent smaller exterior size and a 23 percent larger interior space. Maruti 800 the first choice for all those who want a 'value for money car' that is little on
pocket and big in performance. Maruti 800 is safe, economical and easy to drive
car(with a small turning radius of 4.4 m) in congested road conditions. Since its
launch in December 1984, Maruti 800 has gone through various changes in
styling, structure and technology.
For years Maruti 800 has remained the right opening car for people who look for
low cost of ownership and fuel efficiency. It is a car perfectly made for the Indian
roads. It goes in any location, be it in town, around town, highways, busy streets,
narrow lanes anywhere and everywhere.

In order to make the car more

attractive, new engine has been installed in M800. The M800 E 2 AC has been a
major success.

19

2. Maruti Omni:It is a micro van manufactured by Indian automaker Maruti Suzuki. The first
version of Maruti Omni had 796 cc engine, same as the Maruti 800 city car. This
was the second vehicle to be launched by Maruti, one year after the 800, in 1984.
Later version of the Omni includes the:


Omni (E), released in 1996, 796 cc engine, 8 seater capacity vehicle



Omni XL - 1999, same engine, modified with a higher roof.



Omni Cargo LPG - 2004, created to answer the growing popularity of this
car being used as an inter-city cargo vehicle.[1]



Omni LPG - 2003, same 796 cc engine, added with a factory fitted LPG
Kit, authorized by the Indian RTOs (Regional Transport Offices). This
makes it the most economic 4 wheeler in India, as far as the driving costs
are concerned.



Omni Ambulance - A Modified E version into an ambulance vehicle. This is
the most common type of ambulances found in Indian cities.

3. Gypsy:It is manufactured in India by Maruti Suzuki. It was introduced in the Indian
market in 1985 with the 970cc F10A Suzuki engine and was an instant hit in the
civilian market as well as with law enforcement. It was codenamed MG410 that
stood for Maruti Gypsy 4 cylinder 1.0 litre engine. Initially, it was only available as
a soft-top; but a bolt on hardtop was later introduced to the public after the
aftermarket hardtops became extremely popular. It instantly replaced Premier
Padmini as the quintessential Indian rally car due to its performance, reliability,
tunability and the go-anywhere capability. The carburetted F10A engine made
45bhp and was mated to a 4 speed gearbox. The 4WD transfer case had 2
speeds. It had a freewheeling mechanism

[1]

on the front axles made by Aisin to

unlock the front axles from the hub when 4WD is not used; It reduced rolling
resistance, thereby improving fuel efficiency. However, many owners of the
Gypsy who constantly complained about the poor fuel consumption never knew
20

about this novel feature. The two major complaints of the vehicle in the civilian
market were poor fuel consumption and poor ride quality especially in the rear
seats.
4. WagonR:WagonR The Suzuki Wagon R is a kei car first introduced in Japan in 1993, and
is still in production by Suzuki. The R stands for recreation. It is one of the first
cars to use the "tall wagon" design in which the car is designed to be unusually
tall with a short bonnet and almost vertical hatchback and sides in order to
maximise cabin space while staying within the kei car dimension restrictions.
The Wagon R has been the best-selling kei car in Japan since 2003 and in 2008,
Suzuki expected to produce its three-millionth Wagon R.
It has been a profitable car for Suzuki even in the International market, mainly
since introducing the car in India. The car comes with a variety of trim levels.
These include the LX (sans power steering), Lxi (power steering), VXi (fully
loaded) and the AX (automatic). The car is available with a 5-speed manual
transmission and seats 4 (including the driver) comfortably.
The Wagon R's bread-box shape did not immediately cut ice with the Indian
consumer and the car saw slow sales initially. Recently New version of WangonR
has been launched with more upgraded features. Wearing an innovative and
sporty looks Maruti Suzuki Wagon R is enjoying good market position in small car
segment. India's leading auto maker Maruti Udyog Ltd (MUL) has designed
Wagon R with ample and convertible inner space, finely crafted panels and the
power of a low friction 64 bhp engine. Available in three variants (LX, LXi, VXi)
Wagon R has everything that small car lover looks for.
'Blue Eyed Boy' - The New Wagon R
Maruti has re-lauched its second best selling model to compete in present
competitive car market. The new WagonR is roomier with larger cabin space,
increased leg-room for all passengers and larger boot. Other major highlighs
21

includes fitment of a new L-shaped front suspension for improved ride comfort,
tiltable steering, electrical outside rear view mirror, superior AC for faster cooling
and tubeless tyres. Externally, the new Wagon R flaunts a new grill and bigger
and sweeping headlamps with blue tint giving it a refreshing new look. The new
K10B engine marks the technical advancement and ensures a high mileage of
18.9 kmpl. The new cool colors are bound to get you attracted towards this smart
boy of maruti. Available in three variants viz LX, LXI and VXI, this re-loaded new
Wagon R can make it to your garage in Rs 3.28 - 4.14 lakhs.
5. Alto:The Maruti Alto is the Indian-built Suzuki Alto version, manufactured by Maruti
Suzuki in India. It was launched in the local Indian market on September 27,
2000 although the Alto nameplate was very successfully being used to export the
Maruti Zen to Europe from India since around 1994having captured over 40%
market share in Belgium and 33% in Netherlands by 1998. It is the best-selling
hatchback in India. Since 2006, It is India's largest selling car and crossed the 1
million production figure in February 2008 becoming the 3rd Maruti model to
cross the million mark in India after Maruti 800 and Maruti Omni and 4th overall
joining Hyundai Santro. Besides being exported to Europe from 1994-2004, it has
also been exported to several other countries. In the small hatchback car
segment of India, Maruti Suzuki Alto gives 'maximum' comfort and safety features
with 'minimum' price tag. The most economical petrol engine powered with 32-bit
computer technology delivers great output of 47 bhp. Available with number of
convenient and security features, Maruti Suzuki Alto has become like a hot cake
in its segment.
Maruti Suzuki Alto, is tagged as the Best Selling car of India from last three years.
One of the hottest selling compact cars in the Indian market, Alto has an efficient
engine system and better mileage. Maruto Alto is targeted at middle class
families living in cities because of high fuel economy and affordability. Least
maintenance cost and variety of vibrant colours make it true value for money.
The car has high tensile steel side door beams to guard against the front, rear
and side collision impact. The looks are tough but accommodating, having more
Boot Space than other cars. The AC of the vehicle is ideal for India's tropical
climate
22

Competitor Detail
So many inferences to be drawn from these stats that if I put something,
someone would howl as to why I have missed something else. Still, some very
quick

observations:

1.Distinct slowdown in 2007-08 (FY2008).
2. Maruti’s share has remained the most consistent across 2003-08: 46-47%.
Over the same period, Hyundai down marginally, and so is Tata.
3. Pt.2 needs to be combined with the fact that growth during last 5 years has
been higher in bigger segment (cars and MUVs). That means +for Honda and
Toyota; and growth limitation on Maruti, Hyundai, and Tata.
4. That still leaves a lot of room for these 3: the Indian market will still retain a
small car one (with a gradual shift upwards). The small, compact, and Omni
share of total domestic sales has remained at around 65% for last few years.
5. The bigger segment is growing fast but still very low % of total. That should
change in the next decade.
6. Hyundai has dominated exports. That is a +for the country. On the other hand,
no one has found success in exporting bigger cars. They may export to fellow
LDCs (Bangladesh, etc) but not to competitive markets of US, Europe, and
Japan. Could that change soon? Not soon, though people are trying. As of now,
only M&M and Tata have some plans, but those involve a radical quality
improvement, which will not happen tomorrow (liability laws have made them very
23

cautious). Toyota and Honda have the products, but then they also have factories
worldwide. Possibly India could be used as a regional hub. Suzuki exports small
cars, and its big cars do not sell much anywhere.
7. High growth for One month or quarter or even a year do not make a successful
company, as Fiat and GM have found it (have data prior to 2002 also). Even the
3-year growth can be misleading (when read in isolation). Refer only Skoda. It
was anyway growing at a good rate but selling around 1000 prior to Fabia. Now it
sells 1900-2000. That means a 100% growth. Similarly for Logan/M&M;
Spark/GM.
8. Most important for survival (as any business would be aware) is profits. No
profits and selling at a loss soon leads to extinction. The really good profitable
years were till FY2007. From 2003-07, although steel, aluminium, plastics prices
all increased; higher volumes enabled healthy growth in profits and returns. That
has changed in 2007-08 with higher costs continuing, but volume growth slowing
down. For comparison, I am posting the operating margin and return on networth
for major companies which have publicly available financial results for FY2007
(first figure is margin and second is return):Maruti: 13.5%, 25.4%; margins
increasing

FY2004-07

 Tata: 10.5%, 30.9%; stable margins
 HM: operating losses from 2003-04 onwards
 Hyundai: 8.3%, 20.4%; declining margins from 2001-02 onwards, though
margins have been stable during 2005-07.
 Honda: 11.2%, 30.8%, stable margins
 M&M: 8%, 33.3%; stable margins.
Small Car Market in India
The small car market in India is increasing by leaps and bounds. The indigenous
market for small cars now occupies a substantial share of around 70% of the
annual car production in India of about one million. The main players in the car
market like Tata Motors and Maruti Udyog are fiercely competitive and more or
less all the automobile companies in India that have forayed into the production
24

of small cars are trying to out-do each other in terms of design, innovation,
pricing, and technology, in order to gain control of the small car market in India.
The biggest players in the Indian small car market are engaging in a healthy
competition, which has intensified since the Indian government decided to boost
the small car sector. In this regard, a reduction in the excise duties has been
thought of. Even the engine capacities are expected to be raised to 1500cc.

CONSUMER BEHAVIOUR
Our society is a land of diversity. We see diversity at all level exist among
consumers, among nation, culture, food and taste among marketers and even
among

consumers

behavior

theoretically

perspective.

However,

despite

prevailing diversity in our society.
The term consumers behavior refers to the behavior that consumers
display in searching for purchasing, using, evaluating a disposing of product and
service that they expect will satisfy their needs. To study consumer’s behavior to
spend their available resource to understand and predict behavior in the market
place, it also promotes understanding of the role that consumption play in the
lines of individuals.
Consumer behaviour study include the study what they buy, why they buy
it, when they buy, where they buy it, how often they buy it and how often they use
it. Consumer research takes place at every phases of the consumption process,
before the purchase, during the purchase and after the purchase; consumer
behaviour research goes far beyond these facts of consumer behaviour and
considered the uses of consumers make of the good they buy and their
subsequent evaluation.
Consumer behaviour is inter disciplinary, that it is based on concept and
theories about people that have been involved by scientist in such diverse
disciplines as psychology, sociology, social psychology, cultural anthropology and
economics.

25

Consumer behaviour has been an integral part of strategic market
planning. The belief that ethics and social responsibility should also be Integral
component of every marketing decision is a revised market concept.
The term consumer is often used to describe two different kinds of
consuming entitles the personal consumer and the organizational consumers.
The personal consumers buys goods and service for his/her own use for the
organizational encompasses for profit and non profit business, govt. agencies
and institution all of which must buy product, equipment and service in order to
run their organization.

 Introduction to buying motives
Consumer or buyer is the central figure of all marketing activities. It is the
consumer who determines the growth, prosperity and even existence of a
business enterprise. Hence the marketer should always feel the pulse of
customers. In order to understand the pulse of the customers, the marketer
needs to understand fully the working of buyers mind. It helps him to plan his
production and distribution to suit to the needs and convenience of customers‘ .It
also helps him to plan suitable marketing strategies. Thus it is very essential for
every marketer to know his customers buying motives. Buying motives Motive is
a strong feeling, instinct, desire or emotion that makes a person to do something.
When a motive makes a person to buy a product, then it becomes a buying
motive. Thus buying motive means the influence and considerations which
makes a customer to buy a particular product. According to D.J.Duncan, ―buying
motives are those influences or considerations which provide the impulse to buy,
induce action or determine choice in the purchase of goods and services ‖.
Buying motives are mainly two types, manifest motives and latent motives.
Manifest motives are those motives which are known to the customer and also
ready to admit them.

26

 Consumer Behaviour: Turning to the Web and New C2C Tools
Consumers today have a multitude of sources from which to gather information
during the vehicle buying process, but the Internet tops the list. The web has
become a standard resource in the shopping process for eight out of 10
consumers when researching car purchases. However, the way they use it is
changing. As the web matures, vehicle buyers are visiting fewer sites and
focussing more on manufacturer and C2C websites and less on third-party
information sites and independent e-tailer sties.
 Manufacturer Sites a Key Information Source
Just two years ago, information websites were identified as the number one
information source by web users responding to the Cars Online survey (tied with
family and friends and manufacturer specific dealer), named by 55% of
consumers. This year, they dropped to the number four source, named by 41% of
web users. In comparison, manufacturer sites are now the top source for
consumers who use the web when researching vehicles, named by 70% of
respondents. Two years ago manufacturer sites held the number three position,
named by 43% of web users. The use of dealer websites has remained steady,
with about half of web users turning to these sites.
 Key Factors in Vehicle Choice
When it comes to making their final decision about which vehicle to buy,
consumers focus on factors such as reliability, safety, price and fuel economy. At
the bottom of the list are cash-back incentives, named by fewer than half of
consumers. The importance of incentives as a deciding factor has declined for
the past several years, indicating that consumers today seem less interested in
gimmicks when it comes to their car purchases. Where consumers are in the
buying cycle can make a difference in how they rank the factors that influence
their vehicle choice. For example, additional warranty coverage is important to
consumers who are furthest away from the point of purchase; it was named by
27

69% of respondents who were 13 to 18 months from purchase. However, the
number declines as consumers get closer to actually buying the car: 55% of
respondents who were within three months of purchase said extra warranty
coverage was important. This reflects the fact that consumers will narrow down
the factors that really matter to them as they get closer to the point of purchase.
Demographic factors such as age and gender accounted for some variances. For
example, older consumers tend to put more emphasis on reliability and safety
than do younger respondents. Those in the 50-plus age group were also more
concerned with environmental issues and fuel economy. The youngest
respondents were most likely to rate the ability to research information on the
Internet as an important factor in their vehicle decision. Women tend to rate most
of the factors as more important than do men. The difference was most
pronounced for cash-back incentives, low financing, safety, environmental issues,
fuel economy and additional warranty coverage.

 Purchase decision
Through the evaluation process discussed above consumers will reach their final
purchase decision and they reach the final process of going through the purchase
action e.g. The process of going to the shop to buy the product, which for some
consumers can be as just as rewarding as actually purchasing the product.
Purchase of the product can either be through the store, the web, or over the
phone.
 Post Purchase Behavior
Ever have doubts about the product after you purchased it? This simply is post
purchase behavior and research shows that it is a common trait amongst
purchasers of products. Manufacturers of products clearly want recent
consumers to feel proud of their purchase, it is therefore just as important for
manufacturers to advertise for the sake of their recent purchaser so consumers
28

feel comfortable that they own a product from a strong and reputable
organization. This limits post purchase behavior. i.e. You feel reassured that you
own the latest advertised product.
 Factors influencing the behavior of buyers.
Consumer behavior is affected by many uncontrollable factors. Just think, what
influences you before you buy a product or service? Your friends, your
upbringing, your culture, the media, a role model or influences from certain
groups?
Culture is one factor that influences behavior. Simply culture is defined as our
attitudes and beliefs. But how are these attitudes and beliefs developed? As an
individual growing up, a child is influenced by their parents, brothers, sister and
other family member who may teach them what is wrong or right. They learn
about their religion and culture, which helps them develop these opinions,
attitudes and beliefs (AIO) . These factors will influence their purchase behavior
however other factors like groups of friends, or people they look up to may
influence their choices of purchasing a particular product or service. Reference
groups are particular groups of people some people may look up towards to that
have an impact on consumer behavior. So they can be simply a band like the
Spice Girls or your immediate family members. Opinion leaders are those people
that you look up to because your respect their views and judgments and these
views may influence consumer decisions. So it maybe a friend who works with
the IT trade who may influence your decision on what computer to buy. The
economical environment also has an impact on consumer behavior; do
consumers have a secure job and a regular income to spend on goods?
Marketing and advertising obviously influence consumers in trying to evoke them
to purchase a particular product or service.
Peoples social status will also impact their behavior. What is their role within
society? Are they Actors? Doctors? Office worker? and mothers and fathers also?
Clearly being parents affects your buying habits depending on the age of the
children, the type of job may mean you need to purchase formal clothes, the
income which is earned has an impact. The lifePerformence of someone who
29

earns £250000 would clearly be different from someone who earns £25000. Also
characters have an influence on buying decision. Whether the person is extrovert
(out going and spends on entertainment) or introvert (keeps to themselves and
purchases via online or mail order) again has an impact on the types of
purchases made.
 Maslow’s Hierarchy of Needs
Abraham Maslow hierarchy of needs theory sets out to explain what motivated
individuals in life to achieve. He set out his answer in a form of a hierarchy. He
suggests individuals aim to meet basic psychological needs of hunger and thirst.
When this has been met they then move up to the next stage of the hierarchy,
safety needs, where the priority lay with job security and the knowing that an
income will be available to them regularly. Social needs come in the next level of
the hierarchy, the need to belong or be loved is a natural human desire and
people do strive for this belonging. Esteem need is the need for status and
recognition within society, status sometimes drives people, the need to have a
good job title and be recognized or the need to wear branded clothes as a symbol
of status. But how does this concept help an organization trying to market a
product or service? Well as we have established earlier within this website,
marketing is about meeting needs and providing benefits, Maslow’s concept
suggests that needs change as we go along our path of striving for selfactualization. Supermarket firms develop value brands to meet the psychological
needs of hunger and thirst.
 CUSTOMER
A competitor, in order to achieve the loyalty of the customers, offer an endless
information flow on the products and services and thereby continuously educates
the customer about the opportunities in the market. Therefore today even an
ordinary person, is in possession of the large amount of data to use for the
purpose of making a decision as to which products/ services he would go in for.
The competitive environment is making the customer wisher day by day and he is
able to take a large number of decisions on his own. The experts’ advice of the
olden days is being replaced by the customer’s own wisdom. This is making the
30

market place more complicated and unpredictable.

The customer is getting

smarter today and he is able to decide his own money’s worth and therefore,
organization across the board are `pursuing the customer’s views to streamline
their business strategies to remain customer- worthy. People are the prime factor
for any organization to maintain the effectiveness and thus develop the right
focus for the people, so that each one perceives as clearly as possible his
position in the cycle of growth and prosperity of the organization. Agendas will
have to be drawn in such a manner and communicated so effectively that the
individual is able to enjoy a meaningful life in the organization, endowed with
authority and responsibility for the role he plays. “One should be able to see for
oneself the impact of the contributions one has made towards the growth and
prosperity cycle of the organization. As a matter of fact the relationship between
the people and the organization should be so designed that each one is here to
experience the pleasure of winning and pain of losing. People alone are of no
significance unless and until they have an intimate and continuous interaction
with the process”. Therefore organization have to take continuous care to update
their quality of the people and that of processes simultaneously so that a healthy
relationship is built up and maintained making the relationship happy and healthy
one. This, when done, should generate in people a sense of entrepreneurship
ownership of the organization.
“Since the customer are the main focus of any organization its structure should
be so flat i.e., people fluently interact with the customer and maintain continuous
feedback about the customer’s moods and methods in order to shape its
business portfolio and strategies”.
It is very important to find whether the fundamentals of the organization are
getting strong as desired. It is therefore rightly said that a well trained army with
quality arms and ammunitions and with a sense of involvement can got the
nations frontiers inn desirable and dependable manner similarly: people at the
operation level with superior competency and capability supplied with superior
products and strategies can acquire a place for an organization in the market
place. Retail outlets are the contact points of the customers and therefore the
image of the organization largely depends upon the quality of the people
managing the interventions and transactions at the level.
31

 The Consumer Market:
The consumer market consists of all the individuals and households who buy or
acquire goods and services for personal consumption.

The simplest model

consumer buyer behavior is the stimulus – response model. According to this
model marketing stimuli ( the four Ps) and the major forces (economic,
technological, political, cultural) enter the consumer’s “black box” and reproduce
certain responses.

32

Social factors influence buyer’s behavior. A person’s reference groupfamily, friends, social organizations, professional associations- strongly affect
product and brand choices.

The buyer’s age, life-cycle stage, occupation,

economic circumstances, lifePerformence, personality, and other personal.
Characteristics influence his or her buying decisions.

Consumer life-

Performences the pattern of acting and interacting in the world are also an
important influences on purchase decisions. Finally, consumer-buying behavior is
influenced by four major psychological factors- motivation, perception, learning,
and beliefs and attitudes. Each of these factors provides a different perspective
for understanding the workings of the buyer’s black box

33

CONSUMER BUYING vs. ORGANIZATIONAL BUYING
 Final (or ultimate) consumers purchase for:


personal,



family, or



household use

 Organizational consumers purchase for:


further production,



usage in operating the organization, and/or



resale to other consumers

 Consumer Buying Behavior
The decision processes and acts of final household consumers associated with
evaluating,
consumption

buying,

consuming,

and

discarding

products

for

personal

Consider the purchase an automobile. You generally will not

consider different options until some event triggers a need, such as a problem
needing potentially expensive repair. Once this need has put you "on the market",
you begin to ask your friends for recommendations regarding dealerships and car
models. After visiting several dealerships, you test drive several models and
finally decide on a particular model. After picking up your new car, you have
doubts on the way home, wondering if you can afford the monthly payments, but
then begin to wonder if instead you should have purchased a more expensive but
potentially more reliable model. Over the next five years, the car has several
unexpected breakdowns that lead you to want to purchase a different brand, but
you have been very happy with the services of the local dealership and decide to
again purchase your next car there.

34

In this particular case, the following generic model of consumer decision
making appears to hold:
 Need recognition
 Information search
 Evaluation of alternatives
 Purchase decision
 Post purchase behavior
CONSUMER PERCEPTION
It can be defined as the process by which an individual selects, organizes, and
interprets stimuli into a meaningful and coherent picture of the world. A stimulus is a unit

35

of input to any of the senses. Examples of stimulus ie, sensory input include products,
packages, brand names, advertisements, and commercials, sensory receptor.
Marketers do not want their target audience to look only at the models in their ads.
They want to communicate something about their products as well. Marketers often use
attractive models,humour, other factors to attract the target market’s interest. Information
processing is a series of activities by which stimuli are perceived, transformed in to
information, and stored. Information processing model has four major steps or stages,
a)

Exposure

b)

Attention

c)

Interpretation, and

d)

Memory

36

Consumer Behaviour in Automobile Industry | 37
The first three constitute perception.
Exposure occurs when a stimulus such as an Advertisement hoarding comes within
the range of a person’s vision. Attention occurs when the information from vision pass on
to the brain for processing. Interpretation is the assignment of meaning to the received
sensations. Memory is the short – term use of the meaning for immediate decisionmaking or the longer-term retention of the meaning.
The basic components shown in the figure can be arranged into four groups:
1. Stimuli, which serve as the raw material to be processed.
The stages of processing activities, which are linked by arrows and mainly internal to
the customer.
Situational and consumer characteristics which can influence the nature of these
processing activities, and an executive system, which guides the process by regulating the
type and intensity of processing activities engaged in, at any time.

Consumer Buying Behavior
Possibly the most challenging concept in marketing deals with understanding why buyers do
what they do (or don’t do). But such knowledge is critical for marketers since Wanting a
strong understanding of buyer behavior will help shed light on what is important to the
customer and also suggest the important influences on customer decision-making. Using this
information, marketers can create marketing programs that they believe will be of interest to
customers.
As you might guess, factors affecting how customers make decisions are extremely complex.
Buyer behavior is deeply rooted in psychology with dashes of sociology thrown in just to
make things more interesting. Since every person in the world is different, it is impossible to
have simple rules that explain how buying decisions are made. But those who have spent
many years analyzing customer activity have presented us with useful “guidelines” in how
someone decides whether or not to make a purchase.

K C College

Consumer Behaviour in Automobile Industry | 38
In fact, pick up any textbook that examines customer behavior and each seems to approach it
from a different angle. The perspective we take is to touch on just the basic concepts that
appear to be commonly accepted as influencing customer behavior. We will devote two
sections of the Principles of Marketing Tutorials to customer behavior. In this section we will
examine the buying behavior of consumers (i.e., when people buy for personal reasons) while
in the Business Buying Behavior tutorial we will examine factors that influence buyer’s
decisions in the business market.

Why Consumers Buy
As we discussed in the What is Marketing? tutorial, customers make purchases in order to
satisfy needs. Some of these needs are basic and must be filled by everyone on the planet
(e.g., food, shelter) while others are not required for basic survival and vary depending on the
person. It probably makes more sense to classify needs that are not a necessity as wants or
desires. In fact, in many countries where the standard of living is very high, a large portion of
the population’s income is spent on wants and desires rather than on basic needs.
In this tutorial when we mention the consumer we are referring to the actual buyer, the person
spending the money. But is should also be pointed out that the one who does the buying is not
necessarily the user of what is bought and that others may be involved in the buying decision
in addition to the actual buyer. While the purchasing process in the consumer market is not as
complex as the business market, Wanting multiple people involved in a purchase decision is
not unusual. For example, in planning for a family vacation the mother may make the hotel
reservations but others in the family may have input on the hotel choice. Similarly, a father
may purchase snacks at the grocery store but his young child may be the one who selected it
from the store shelf.
So understanding consumer purchase behavior involves not only understanding how
decisions are made but also understanding the dynamics that influence purchases.

What Influences Purchasing
As we discussed the decision-making process for consumers is anything but straight forward.
There are many factors that can affect this process as a person works through the purchase
decision. The number of potential influences on consumer behavior is limitless. However,

K C College

Consumer Behaviour in Automobile Industry | 39
marketers are well served to understand the KEY influences. By doing so they may be in a
position to tailor their marketing efforts to take advantage of these influences in a way that
will satisfy the consumer and the marketer (remember this is a key part of the definition of
marketing).

For the purposes of this tutorial we will break these influences down into three main
categories: Internal, External and Marketing. However, those interested in learning more
about customer buying activity may want to consult one or more consumer behavior books
where they will find additional methods for explaining consumer buying behavior.
For the most part the influences are not mutually exclusive. Instead, they are all
interconnected and, as we will see, work together to form who we are and how we behave.
For each of the influences that are discussed we will provide a basic description and also
suggest its implication to marketers. Bear in mind we only provide a few marketing
implications for each influence; clearly there are many more.

K C College

Consumer Behaviour in Automobile Industry | 40
Internal Influences: Perceptual Filter
We start our examination of the influences on consumer purchase decisions by first looking
inside ourselves to see which are the most important internal factors that affect how we make
choices.
Perceptual Filter
Perception is how we see ourselves and the world we live in. However, what ends up being
stored inside us doesn’t always get there in a direct manner. Often our mental makeup results
from information that has been consciously or subconsciously filtered as we experience it, a
process we refer to as a perceptual filter. To us this is our reality, though it does not mean it is
an accurate reflection on what is real. Thus, perception is the way we filter stimuli (e.g.,
someone talking to us, reading a newspaper story) and then make sense out of it.
Perception has several steps.


Exposure – sensing a stimuli (e.g. seeing an ad)



Attention – an effort to recognize the nature of a stimuli (e.g. recognizing it is an ad)



Awareness – assigning meaning to a stimuli (e.g., humorous ad for particular product)



Retention – adding the meaning to one’s internal makeup (i.e., product has fun ads)

How these steps are eventually carried out depends on a person’s approach to learning. By
learning we mean how someone changes what they know, which in turn may affect how they
act. There are many theories of learning, a discussion of which is beyond the scope of this
tutorial, however, suffice to say that people are likely to learn in different ways. For instance,
one person may be able to focus very strongly on a certain advertisement and be able to retain
the information after being exposed only one time while another person may need to be
exposed to the same advertisement many times before he/she even recognizes what it is.
Consumers are also more likely to retain information if a person has a strong interest in the
stimuli. If a person is in need of new car they are more likely to pay attention to a new
advertisement for a car while someone who does not need a car may need to see the
advertisement many times before they recognize the brand of automobile.
Marketing Implications:
Marketers spend large sums of money in an attempt to get customers to have a positive

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impression of their products. But clearly the existence of a perceptual filter suggests that
getting to this stage is not easy. Exposing consumers to a product can be very challenging
considering the amount of competing product messages (ads) that are also trying to
accomplish the same objective (i.e., advertising clutter). So marketers must be creative and
use various means to deliver their message. Once the message reaches consumer it must be
interesting enough to capture their attention (e.g., talk about the product’s benefits). But
attending to the message is not enough. For marketers the most critical step is the one that
occurs with awareness. Here marketers must continually monitor and respond if their
message becomes distorted in ways that will negatively shape its meaning. This can often
happen due in part to competitive activity (e.g., comparison advertisements). Finally, getting
the consumer to give positive meaning to the message they have retained requires the
marketer make sure that consumers accurately interpret the facts about the product.

Internal Influences: Knowledge
Knowledge is the sum of all information known by a person. It is the facts of the world as
he/she knows it and the depth of knowledge is a function of the breadth of worldly
experiences and the strength of an individual’s long-term memory. Obviously what exists as
knowledge to an individual depends on how an individual’s perceptual filter makes sense of
the information it is exposed to.
Marketing Implications:
Marketers may conduct research that will gauge consumers’ level of knowledge regarding
their product. As we will see below, it is likely that other factors influencing consumer
behavior are in large part shaped by what is known about a product. Thus, developing
methods (e.g., incentives) to encourage consumers to accept more information (or correct
information) may affect other influencing factors.

Internal Influences: Attitude
In simple terms attitude refers to what a person feels or believes about something.
Additionally, attitude may be reflected in how an individual acts based on his or her beliefs.
Once formed, attitudes can be very difficult to change. Thus, if a consumer has a negative
attitude toward a particular issue it will take considerable effort to change what they believe
to be true.

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Marketing Implications:
Marketers facing consumers who have a negative attitude toward their product must work to
identify the key issues shaping a consumer’s attitude then adjust marketing decisions (e.g.,
advertising) in an effort to change the attitude. For companies competing against strong rivals
to whom loyal consumers exhibit a positive attitude, an important strategy is to work to see
why consumers feel positive toward the competitor and then try to meet or beat the
competitor on these issues. Alternatively, a company can try to locate customers who feel
negatively toward the competitor and then increase awareness among this group.

Internal Influences: Personality
An individual’s personality relates to perceived personal characteristics that are consistently
exhibited, especially when one acts in the presence of others. In most, but not all, cases the
behaviors one projects in a situation is similar to the behaviors a person exhibits in another
situation. In this way personality is the sum of sensory experiences others get from
experiencing a person (i.e., how one talks, reacts). While one’s personality is often interpreted
by those we interact with, the person has their own vision of their personality, called Self
Concept, which may or may not be the same has how others view us.
Marketing Implications:
For marketers it is important to know that consumers make purchase decisions to support
their self concept. Using research techniques to identify how customers view themselves may
give marketers insight into products and promotion options that are not readily apparent. For
example, when examining consumers a marketer may initially build marketing strategy
around more obvious clues to consumption behavior, such as consumer’s demographic
indicators (e.g., age, occupation, income). However, in-depth research may yield information
that shows consumers are purchasing products to fulfill self-concept objectives that have little
to do with the demographic category they fall into (e.g., senior citizen may be making
purchases that make them feel younger). Appealing to the consumer’s self concept needs
could expand the market to which the product is targeted.

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Internal Influences: LifePerformence
This influencing factor relates to the way we live through the activities we engage in and
interests we express. In simple terms it is what we value out of life. LifePerformence is often
determined by how we spend our time and money.
Marketing Implications:
Products and services are purchased to support consumers’ lifePerformences. Marketers have
worked hard researching how consumers in their target markets live their lives since this
information is key to developing products, suggesting promotional strategies and even
determining how best to distribute products. The fact that lifePerformence is so directly tied
to marketing activity will be further examined as we discuss developing target market
strategies (See Targeting Markets) tutoria

Internal Influences: Motivation
Motivation relates to our desire to achieve a certain outcome. Many internal factors we have
already discussed can affect a customer’s desire to achieve a certain outcome but there are
others. For instance, when it comes to making purchase decisions customers’ motivation
could be affected by such issues as financial position (e.g., Can I afford the purchase?), time
constraints (e.g., Do I need to make the purchase quickly?), overall value (e.g., Am I getting
my money’s worth?), and perceived risk (e.g., What happens if I make a bad decision?).
Marketing Implications:
Motivation is also closely tied to the concept of Involvement, which relates to how much
effort the consumer will exert in making a decision. Highly motivated consumers will want to
get mentally and physically involved in the purchase process. Not all products have a high
percentage of highly involved customers (e.g., milk) but marketers who market products and
services that may lead to high level of consumer involvement should prepare options that will
be attractive to this group. For instance, marketers should make it easy for consumers to learn
about their product (e.g., information on website, free video preview) and, for some products,
allow customers to experience the product (e.g., free trial) before committing to the purchase

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Internal Influences: Roles
Roles represent the position we feel we hold or others feel we should hold when dealing in a
group environment. These positions carry certain responsibilities yet it is important to
understand that some of these responsibilities may, in fact, be perceived and not spelled out
or even accepted by others. In support of their roles, consumers will make product choices
that may vary depending on which role they are assuming. As illustration, a person who is
responsible for selecting snack food for an office party his boss will attend may choose
higher quality products than he would choose when selecting snacks for his family.
Marketing Implications:
Advertisers often show how the benefits of their products aid consumers as they perform
certain roles. Typically the underlying message of this promotional approach is to suggest
that using the advertiser’s product will help raise one’s status in the eyes of others while using
a competitor’s product may have a negative effect on status.

External Influences: Culture
Consumer purchasing decisions are often affected by factors that are outside of their control
but have direct or indirect impact on how we live and what we consume. One example of this
are cultural factors
Culture represents the behavior, beliefs and, in many cases, the way we act learned by
interacting or observing other members of society. In this way much of what we do is shared
behavior, passed along from one member of society to another. Yet culture is a broad concept
that, while of interest to marketers, is not nearly as important as understanding what occurs
within smaller groups or Sub-Cultures to which we may also belong. Sub-cultures also have
shared values but this occurs within smaller groups. For instance, sub-cultures exist where
groups share similar values in terms of ethnicity, religious beliefs, geographic location,
special interests and many others.
Marketing Implications:
As part of their efforts to convince customers to purchase their products, marketers often use
cultural representations, especially in promotional appeals. The objective is to connect to
consumers using cultural references that are easily understood and often embraced by the

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consumer. By doing so the marketer hopes the consumer feels more comfortable with or can
relate better to the product since it corresponds with their cultural values. Additionally, smart
marketers use strong research efforts in an attempt to identify differences in how sub-culture
behaves. These efforts help pave the way for spotting trends within a sub-culture, which the
marketer can capitalize on through new marketing tactics (e.g., new products, new sales
channels, added value, etc.).

External Influences: Group Membership
In addition to cultural influences, consumers belong to many other groups with which they
share certain characteristics and which may influence purchase decisions. Often these groups
contain Opinion Leaders or others who have major influence on what the customer purchases.
Some of the basic groups we may belong to include:


Social Class – represents the social standing one has within a society based on such
factors as income level, education, occupation



Family – one’s family situation can have a strong effect on how purchase decisions
are made



Reference groups – most consumers simultaneously belong to many other groups with
which they associate or, in some cases, feel the need to disassociate

Marketing Implications:
Identifying and understanding the groups consumers belong to is a key strategy for marketers.
Doing so helps identify target markets, develop new products, and create appealing marketing
promotions to which consumers can relate. In particular, marketers seek to locate group
leaders and others to whom members of the group look for advice or direction. These opinion
leaders, if well respected by the group, can be used to gain insight into group behavior and if
these opinion leaders accept promotional opportunities could act as effective spokespeople
for the marketer’s products.

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External Influences: Purchase Situation
Purchase Situation
A purchase decision can be strongly affected by the situation in which people find
themselves. In general, a situation is the circumstances a person faces when making a
purchase decision, such as the nature of their physical environment, their emotional state, or
time constraints. Not all situations are controllable, in which case a consumer may not follow
their normal process for making a purchase decision. For instance, if a person needs a product
quickly and a store does not carry the brand they normally purchase, the customer may
choose a competitor’s product.
Marketing Implications:
Marketers can take advantage of decisions made in uncontrollable situations in at least two
ways. First, marketers can use promotional methods to reinforce a specific selection of
products when the consumer is confronted with a particular situation. For example,
automotive services can be purchased that promise to service vehicles if the user runs into
problems anywhere and at anytime. Second, marketers can use marketing methods that
attempt to convince consumers that a situation is less likely to occur if the marketer’s product
is used. This can also be seen with auto products, where marketers explain that using their
product will prevent unexpected damage to their vehicles.

Types of Consumer Purchase Decisions
Consumers are faced with purchase decisions nearly every day. But not all decisions are
treated the same. Some decisions are more complex than others and thus require more effort
by the consumer. Other decisions are fairly routine and require little effort. In general,
consumers face four types of purchase decisions:
Minor New Purchase – these purchases represent something new to a consumer but in the
customer’s mind is not a very important purchase in terms of need, money or other reason
(e.g., status within a group).

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Minor Re-Purchase – these are the most routine of all purchases and often the
consumer returns to purchase the same product without giving much thought to other
product options (i.e., consumer is brand loyalty).



Major New Purchase – these purchases are the most difficult of all purchases because
the product being purchased is important to the consumer but the consumer has little
or no previous experience making these decisions. The consumer’s lack of confidence
in making this type of decision often (but not always) requires the consumer to engage
in an extensive decision-making process..



Major Re-Purchase - these purchase decisions are also important to the consumer but
the consumer feels confident in making these decisions since they have previous
experience purchasing the product.

For marketers it is important to understand how consumers treat the purchase decisions they
face. If a company is targeting customers who feel a purchase decision is difficult (i.e., Major
New Purchase), their marketing strategy may vary greatly from a company targeting
customers who view the purchase decision as routine. In fact, the same company may face
both situations at the same time; for some the product is new, while other customers see the
purchase as routine. The implication of buying behavior for marketers is that different buying
situations require different marketing efforts.

How Consumers Buy
So now that we have discussed the factors influencing a consumer’s decision to purchase,
let’s examine the process itself. This process is presented in a sequence of 5 steps as shown
below.

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However, whether a consumer will actually carryout each step depends on the type of
purchase decision that is faced. For instance, for minor re-purchases the consumer may be
quite loyal to the same brand, thus the decision is a routine one (i.e., buy the same product)
and little effort is involved in making a purchase decision. In cases of routine, brand loyal
purchases consumers may skip several steps in the purchasing process since they know
exactly what they want allowing the consumer to move quickly through the steps. But for
more complex decisions, such as Major New Purchases, the purchasing process can extend
for days, weeks, months or longer. So in presenting these steps marketers should realize that,
depending on the circumstances surrounding the purchase, the importance of each step may
vary.
1. Need/Want/Desire is recognized
In the first step the consumer has determined that for some reason he/she is not satisfied (i.e.,
consumer’s perceived actual condition) and wants to improve his/her situation (i.e.,
consumer’s perceived desired condition). For instance, internal triggers, such as hunger or
thirst, may tell the consumer that food or drink is needed. External factors can also trigger
consumer’s needs. Marketers are particularly good at this through advertising, in-store
displays and even the intentional use of scent (e.g., perfume counters). At this stage the
decision-making process may stall if the consumer is not motivated to continue (see
Motivation above). However, if the consumer does have the internal drive to satisfy the need
they will continue to the next step.
2. Search for Information
Assuming consumers are motivated to satisfy his or her need, they will next undertake a
search for information on possible solutions. The sources used to acquire this information
may be as simple as remembering information from past experience (i.e., memory) or the
consumer may expend considerable effort to locate information from outside sources (e.g.,
Internet search, talk with others, etc.). How much effort the consumer directs toward
searching depends on such factors as: the importance of satisfying the need, familiarity with
available solutions, and the amount of time available to search. To appeal to consumers who
are at the search stage, marketers should make efforts to ensure consumers can locate
information related to their product. For example, for marketers whose customers rely on the

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Internet for information gathering, attaining high rankings in search engines has become a
critical marketing objective.
3. Evaluate Options
Consumers’ search efforts may result in a set of options from which a choice can be made. It
should be noted that there may be two levels to this stage. At level one the consumer may
create a set of possible solutions to their needs (i.e., product types) while at level two the
consumer may be evaluating particular products (i.e., brands) within each solution. For
example, a consumer who needs to replace a television has multiple solutions to choose from
such as plasma, LCD and CRT televisions. Within each solution type will be multiple brands
from which to choose. Marketers need to understand how consumers evaluate product
options and why some products are included while others are not. Most importantly,
marketers must determine which criteria consumers are using in their selection of possible
options and how each criterion is evaluated. Returning to the television example, marketing
tactics will be most effective when the marketer can tailor their efforts by knowing what
benefits are most important to consumers when selecting options (e.g., picture quality, brand
name, screen size, etc.) and then determine the order of importance of each benefit.

4. Purchase
In many cases the solution chosen by the consumer is the same as the product whose
evaluation is the highest. However, this may change when it is actually time to make the
purchase. The "intended" purchase may be altered at the time of purchase for many reasons
such as: the product is out-of-stock, a competitor offers an incentive at the point-of-purchase
(e.g., store salesperson mentions a competitor’s offer), the customer lacks the necessary funds
(e.g., credit card not working), or members of the consumer’s reference group take a negative
view of the purchase (e.g., friend is critical of purchase). Marketers whose product is most
desirable to the consumer must make sure that the transaction goes smoothly. For example,
Internet retailers have worked hard to prevent consumers from abandoning online purchase
(i.e., online shopping carts) by streamlining the checkout process. For marketers whose
product is not the consumer’s selected product, last chance marketing efforts may be worth

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exploring, such as offering incentives to store personnel to "talk up" their product at the
checkout line.
5. After-Purchase Evaluation
Once the consumer has made the purchase they are faced with an evaluation of the decision.
If the product performs below the consumer’s expectation then he/she will re-evaluate
satisfaction with the decision, which at its extreme may result in the consumer returning the
product while in less extreme situations the consumer will retain the purchased item but may
take a negative view of the product. Such evaluations are more likely to occur in cases of
expensive or highly important purchases. To help ease the concerns consumers have with
their purchase evaluation, marketers need to be receptive and even encourage consumer
contact. Customer service centers and follow-up market research are useful tools in helping to
address purchasers’ concerns.

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CONCLUSION
Since Indian Automobile market is continuously in the prowl of surging as a major car
manufacturer, people are purchasing car as there is increase of income of common
people as well as change in tastes and preferences of consumers. It is important for
the car manufacturers and car dealers to be able to understand the different factors
affecting the extent in car purchasing behaviour. People are more conscious about
the on spot information provided about various cars who serves according to the
needs and wants of the customer. The type of technology used and the wider reach
of the service stations also affect the most on car purchasing decision. While
government obligations and various policies like import duties, custom exemptions is
seen as second most affecting driver of purchase of cars. Factor 3 includes family
needs; brand image; income level; special family programs/events like Anniversary,
Birthday; insurance facility; credit card acceptance; car accessories affects
customers car purchase decision causing a variance of 3.080.This shows that
importance of family decisions, special occasions in family and the various services
provided by car dealers. includes installment payment facility; location of the car
dealer shop; looks; availability of service station showing customers accessibility to
the service provided. Factor 5 shows the impact of various promotional activities and
extra care taken by car dealers. Factors 6 shows the impact of suggestion provided
by family members and peers as well as price and after sales service provided.
includes the infrastructural benefits of the shop and the variety of cars it stores .The
last but not the least ones shows the impact of factors of technical specifications of
the car and the festive season offersThis study was conducted to find out the
consumer buying behaviour of motorcars in special reference to the Maruti brand in
Tezpur. The findings and analysis revealed many advantages as well as
disadvantages for the Maruti India Pvt Ltd.
Though the Maruti is the faster growing company and leading in the market
facing a stiff competition from Hyundai and Tata motors in the Tezpur.
It has been observed that Maruti adopted many promotional strategies and
company’s marketing channel is also satisfactory.

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Now a days people are most aware about after sales service. The dealers
also expect Maruti has over come this problem and facilities should be improved for
meeting the after sales service requirement effectively.
The majority of customers expect loan or installment facilities. The Maruti has
joined hand with State Bank Of India and many private bank to promote this facilities.
As most of the existing and prospective customers adults, Maruti should
introduces stylish Motor cars which compete its competitors product.
But Maruti to meet the expectations of new generation people who are the
prospect, or customers has recently introduce Ritz, SX4, WagonR hoping to fulfill the
demand of the new generation.
As this study was conducted for educational purpose with the aim to give
necessary information to the organization, any mistake by the researchers should be
overlooked considering his inexperience in the field of marketing research.

K C College

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